ISLAMABAD: The tax authorities have reduced penalty amount to half on making false or misleading statement under various sections of Income Tax Ordinance, 2001.
Through Tax Laws (Second Amendment) Ordinance, 2021 promulgated a day earlier, the penal amount under Section 182 for misleading or false statement has been reduced to 50 percent from 100 percent of the amount of tax shortfall.
Under Serial No. 10 of Section 182: any person who makes a false or misleading statement to an Inland Revenue Authority either in writing or orally or electronically including a statement in an application, certificate, declaration, notification, return, objection or other document including books of accounts made, prepared, given, filed or furnished under this Ordinance, then such person shall pay a penalty of twenty five thousand rupees or 50 percent of the amount of tax shortfall whichever is higher:
Provided that in case of an assessment order deemed under section 120, no penalty shall be imposed to the extent of the tax shortfall occurring as a result of the taxpayer taking a reasonably arguable position on the application of this Ordinance to the taxpayers’ position.
Through the latest ordinance, the penalty for misleading information under Section 114A has also been imposed. Section 114A is related to taxpayers’ profile.
ISLAMABAD: Federal Board of Revenue (FBR) on Friday extended the last date for updating taxpayer profile up to June 30, 2021.
The FBR issued Circular No. 14 of 2021 on March 26, 2021 to extend the date for updating taxpayer profile from March 31, 2021 to June 30, 2021.
The date has been extended on the request of the tax bars that coronavirus cases were on the rise and most of the offices were working with 50 percent strength.
Updating profile by all the taxpayers registered under Section 181 of the Income Tax Ordinance, 2001 and other conditions specified by the Federal Board of Revenue (FBR) is a mandatory requirement under Section 114A of the Ordinance.
Through Finance Act, 2020, the Section 114A was introduced to make the updating profile mandatory for following persons:
(a) every person applying for registration under section 181;
(b) every person deriving income chargeable to tax under the head, “Income from business”;
(c) every person whose income is subject to final taxation;
(d) any non-profit organization as defined in clause (36) of section 2;
(e) any trust or welfare institution; or
(f) any other person prescribed by the Board.
The FBR explained the newly introduced section as: “Complexity of return forms is an embodiment of the complexity of tax law. Nevertheless, there is a dire need to simplify return forms without compromising on data required to verify accuracy of the declared version.”
The FBR said that instead of endeavoring to obtain all the relevant information in the income tax return, a new section has been added wherein taxpayers profile may be prescribed in order to capture data relevant to the taxpayer.
It said that persons who are already registered before September 30, 2020 and are deriving business or incomes subject to final taxation, trusts, welfare institutions, non-profit organizations and such other persons prescribed by the FBR are proposed to file a profile on or before December 31, 2020, which is not extended up to March 31, 2021.
Persons who obtain their registration after September 30, 2020 are proposed to furnish such profile within 90 days of registration. In case of any change in particulars of information, such persons shall update their profile within 90 days of the change in particulars. The profile contains information relevant to income regarding bank accounts, utility connections, business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer, types of businesses and such other information as may be prescribed by the FBR.
The FBR said that if a person fails to furnish or update a taxpayer’s profile within the due date or time period as extended by the FBR under Section214A, such person shall not be included in the active taxpayers list for the latest tax year ending prior to the aforesaid due date or extended date.
However, upon filing or updating the profile, such persons shall be allowed to be placed on the active taxpayers list upon payment of surcharge which is Rs20,000 in the case of a company, Rs10,000 in the case of an association of persons and Rs1,000 in the case of an individual.
Further, a penalty for non-filing or not updating of profile is also proposed at the rate of Rs2,500 for each day of default subject to minimum penalty of Rs10,000.
ISLAMABAD: A tax credit granted to encourage companies for enlistment in stock exchange has been abolished through Tax Laws (Second Amendment) Ordinance, 2021.
Sources in Federal Board of Revenue (FBR) said that Section 65C of the Income Tax Ordinance, 2001 has been abolished through Tax Laws (Second Amendment) Ordinance, 2021.
They said that this concession was granted through Finance Act, 2010. The cost of this credit was Rs357 million during fiscal year 2019/2020.
According to omitted section 65C related to tax credit for enlistment:
(1) Where a taxpayer being a company opts for enlistment in any registered stock exchange in Pakistan on or before the 30th day of June, 2022 a tax credit equal to twenty percent of the tax payable shall be allowed for the tax year in which the said company is enlisted “and for the following three tax years:
Provided that the tax credit for the last two years shall be ten per cent of the tax payable.
ISLAMABAD: First year allowance has been withdrawn that was allowed on installation of plant and machinery by any industrial unit. The concession has been withdrawn through Tax Laws (Second Amendment) Ordinance, 2021.
The first year allowance has been abolished that was available under Section 23A of Income Tax Ordinance, 2001 at the rate of 90 percent. An initial allowance was available at 25 percent for installation of plant and machinery, according to officials of the Federal Board of Revenue (FBR).
The omitted section 23A was:
First Year Allowance.—(1) Plant, machinery and equipment installed by any industrial undertaking set up in specified rural and under developed areas or engaged in the manufacturing of cellular mobile phones and qualifying for exemption under clause (126N) of Part I of the Second Schedule and owned and managed by a company shall be allowed first year allowance in lieu of initial allowance under section 23 at the rate specified in Part II of the Third Schedule against the cost of the “eligible depreciable assets” put to use after July 1, 2008.
(2) The provisions of section 23 except sub-sections (1) and (2) thereof, shall mutatis mutandis apply.
(3) The Federal Government may notify “specified areas” for the purposes of sub-section (1).
KARACHI: Federal Board of Revenue (FBR) has been proposed to restore zero-rating of sales tax with objective of ‘no payment no refund’.
The FBR received proposals for the upcoming budget 2021/2022 from Karachi Chamber of Commerce and Industry (KCCI).
It is highlighted that in the budget 2019-2020, the Federal Government rescinded SRO1125 and imposed 17 percent Sales Tax on erstwhile Five Zero-Rated Export Sectors and exporters are required to apply for refund after export of consignment.
It is observed that the exporters who have filed their refund claims to date have received 35 percent of claims payment only while 65 percent of the refund claims are stuck up with the Government which is approximately 12 percent amount of exporter’s running capital.
However, the profit margin of exporters is around 5 percent to 8 percent. Moreover, exporter can apply for refund only after export of consignment.
In this manner their liquidity is stuck. Likewise, the exporters make purchases for production of export products at least six months in advance which is consumed based on export orders causing financial hardships.
The KCCI proposed that it is imperative to revive SRO 1125 in its true spirit and reintroduce system of No Payment and No Refund of Sales Tax for the Five Export Oriented Sectors.
Although the Government has streamlined the FASTER system, nonetheless, the exporters are facing liquidity crunch amid condition of filing claims only after dispatch of shipment which takes at least three months time. Consequently, the liquidity is held-up causing financial pressure on exporters.
The chamber explained the benefits of reviving zero rating that the government must consider to restore and revive Zero-Rating under SRO1125 in real spirit or consider reduction in rate of Sales Tax from current 17 percent to 5 percent to facilitate the exports ensuring availability of required/ adequate liquidity and smooth Cash flow, to boost the confidence of Exporters to enhance their exports and cement their business ties with the foreign counterparts to capture true business potential.
ISLAMABAD: The officials of State Bank of Pakistan (SBP) to be given immunity against any legal suit and prosecution for any act of commission or omission done in exercise of any powers.
According to proposed amendments to the State Bank of Pakistan Act, 1956 issued by the finance ministry on Thursday, “No suit, prosecution or any other legal proceeding including for damages shall lie against the SBP, board of directors of member thereof, governor, deputy governors, member of any board committee and monetary policy committee, officers and employees of the central bank for any act of commission or omission done in exercise or performance of any functions, power or duty conferred or imposed by or under this Act upon such persons or any rules and regulations made thereunder or any legislation administered by the SBP unless such act is done in bad faith and with mala fide intent.”
It is further proposed the governor, deputy governors, directors, members of any board committee and monetary policy committee, officers and employees of the bank shall not be liable in their personal capacity for any act of commission or omission done in their official capacity in good faith and in case of any such proceedings as mentioned in sub-section (1), they shall be indemnified by the bank which shall bear all the expenses thereof, till final decision of the case.
Another immunity proposed to SBP officials, which stated: :”No action, inquiry, investigation or proceedings shall be taken by National Accountability Bureau (NAB), Federal Investigation Agency (FIA) or provincial investigation agency, bureau, authority or institution by whatever name called without prior consent of the board of directors of the SBP.”
Whereas, the present law says: “Every (person in service) of the bank shall be deemed to be a public servant within the meaning of Section of the Pakistan Penal Code.”
The proposed amendments also suggested increasing the tenure of SBP governor to five years from existing three years.
ISLAMABAD: Federal Board of Revenue (FBR) on Thursday reminded taxpayers to update their profile by March 31, 2021 to avoid penal action.
“Statutory deadline for furnishing/updating of taxpayers’ profile under section 114A of the Income Tax Ordinance, 2001 is March 31, 2021,” the FBR said and urged taxpayers to update profile before the deadline in order to avoid penal consequences under the law.
Updating profile by all the taxpayers registered under Section 181 of the Income Tax Ordinance, 2001 and other conditions specified by the Federal Board of Revenue (FBR) is a mandatory requirement under Section 114A of the Ordinance.
Through Finance Act, 2020, the Section 114A was introduced to make the updating profile mandatory for following persons:
(a) every person applying for registration under section 181;
(b) every person deriving income chargeable to tax under the head, “Income from business”;
(c) every person whose income is subject to final taxation;
(d) any non-profit organization as defined in clause (36) of section 2;
(e) any trust or welfare institution; or
(f) any other person prescribed by the Board.
The FBR explained the newly introduced section as: “Complexity of return forms is an embodiment of the complexity of tax law. Nevertheless, there is a dire need to simplify return forms without compromising on data required to verify accuracy of the declared version.”
The FBR said that instead of endeavoring to obtain all the relevant information in the income tax return, a new section has been added wherein taxpayers profile may be prescribed in order to capture data relevant to the taxpayer.
It said that persons who are already registered before September 30, 2020 and are deriving business or incomes subject to final taxation, trusts, welfare institutions, non-profit organizations and such other persons prescribed by the FBR are proposed to file a profile on or before December 31, 2020, which is not extended up to March 31, 2021.
Persons who obtain their registration after September 30, 2020 are proposed to furnish such profile within 90 days of registration. In case of any change in particulars of information, such persons shall update their profile within 90 days of the change in particulars. The profile contains information relevant to income regarding bank accounts, utility connections, business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer, types of businesses and such other information as may be prescribed by the FBR.
The FBR said that if a person fails to furnish or update a taxpayer’s profile within the due date or time period as extended by the FBR under Section214A, such person shall not be included in the active taxpayers list for the latest tax year ending prior to the aforesaid due date or extended date.
However, upon filing or updating the profile, such persons shall be allowed to be placed on the active taxpayers list upon payment of surcharge which is Rs20,000 in the case of a company, Rs10,000 in the case of an association of persons and Rs1,000 in the case of an individual.
Further, a penalty for non-filing or not updating of profile is also proposed at the rate of Rs2,500 for each day of default subject to minimum penalty of Rs10,000.
KARACHI: State Bank of Pakistan (SBP) on Thursday issued revised mark up subsidy allowed by the government for low cost housing scheme.
The SBP issued instructions to the banks for implementation of the revised mark up subsidy approved by the government.
In view of the feedback received from various stakeholders, Government of Pakistan (GoP) has decided to revise features of the G-MSS to align it with market dynamics. These revisions aim at significantly enhancing outreach of Scheme to the individuals and households who currently do not own a house.
The key features of the revised G-MSS approved by the GoP are given below:
Particulars
Mark up Subsidy Program
Eligibility Criteria
All men/women holding CNIC First time home owner One individual can have subsidized house loan facility under this scheme only once
Tiers of the Scheme
Financing under Tier 0 is available through microfinance banks for financing of housing units under non-NAPHDA projects. Financing under Tier 1 is available through banks for financing under NAPHDA projects Financing under Tier 2 and Tier 3 is available through banks for financing of housing units under non-NAPHDA projects
Size of Housing Unit
Size of the loan is segregated into four tiers, as under: Tier 0 (T0) – (a) House upto 125 sq yds (5 Marla) and (b) flat/apartment with maximum covered area of 1,250 sq ft. Tier 1 (T1) – (a) House upto 125 sq yds (5 Marla) with maximum covered area of 850 sq ft and (b) Flat/apartment with maximum covered area of 850 sq ft. Tier 2 (T2) – (a) House upto 125 sq yds (5 Marla) and (b) flat/apartment with maximum covered area of 1,250 sq ft. Tier 3 (T3) – (a) House upto 250 sq yds (10 Marla) and (b) flat/apartment with maximum covered area of 2,000 sq ft.
Age of housing units
Newly constructed housing units during last one year from the date of application. However, this requirement will not be applicable till March 31, 2023 under Tier 0, Tier 2 and Tier 3.
Maximum Price of Housing Units
Maximum Price (Market Value) of a single housing unit at the time of approval of financing, as under: Tier 1 (T1) – Rs 3.5 million Tier 0 (T0), Tier 2 (T2) and Tier 3 (T3) – No cap
Maximum Loan size
Maximum size of the loan of a single housing unit, as under: Tier 0 (T0) – Rs 2.0 million Tier 1 (T1) – Rs 2.7 million Tier 2 (T2) – Rs 6.0 million Tier 3 (T3) – Rs 10.0 million
Loan type
Long term housing finance loans
Loan Tenor
Minimum 5 years and maximum 20 years loan tenor, depending upon choice of customers.
Security Requirements
As per banks’credit policy and prudential regulations for housing finance, the housing unit financed will be mortgaged in favor of financing bank.
Allocation in Budget
Finance Division shall give authority to SBP to debit GOP account on quarterly basis for the subsidy payment to banks.
Payment will be made to the banks on submission of quarterly-consolidated subsidy statement as per format prescribed by State Bank.
Pricing
Pricing for Housing Loans: Loan Tiers Customer Pricing Bank Pricing Tier 0 5% for first 5 years & 7% for next 5 years KIBOR+700 BPS Tier 1 3% for first 5 years & 5% for next 5 years KIBOR+250 BPS Tier 2 5% for first 5 years & 7% for next 5 years KIBOR+400 BPS (Spread may vary) Tier 3 7% for first 5 years & 9% for next 5 years For loan tenors exceeding 10 years, market rate i.e. bank pricing will be applicable for the period exceeding 10 years.
Executing Agency
All commercial banks including Islamic banks, microfinance banks and House Building Finance Company Limited (HBFCL)
Application Form
A standardized Application Form both in English and Urdu will require minimum essential information with simple format.
The processing time will not exceed 30 days after submission of all documents by the borrower and the same will be clearly stated in the application form.
Standardized Procedures
Banks to have standardized loan documents and risk acceptance criteria
Monitoring
SBP will publish consolidated information about the loans extended under this program for information of the public on quarterly basis on its website.
Geographical distribution
Whole of Pakistan
The revised features are applicable with immediate effect. Accordingly, IH&SMEFD Circular No. 11 of 2020 is hereby superseded. However, instructions notified vide IH&SMEFD Circular No. 01 of 2021 will continue to remain applicable.
The SBP directed the banks to ensure successful implementation of revised G-MSS through dissemination of necessary instructions to branches/ regions, capacity building of field staff, alignment of housing finance products and active marketing campaigns, etc.
The State Bank of Pakistan (SBP) reported a rise in the country’s liquid foreign exchange reserves, which increased by $276 million to reach $20.435 billion by the week ending March 19, 2021.
